Trade group sues to block Seattle’s ‘arbitrary’ minimum wage hike

(Reuters) – A trade group sued the city of Seattle on Wednesday, seeking to block a sharp hike in the minimum wage to $15 an hour over the next seven years on the grounds that it unfairly favors small businesses over larger employers and franchises.

The lawsuit was filed in federal court in Seattle by the Washington, D.C.- based International Franchise Association on behalf of five franchisees, claiming violations of the commerce, equal protection and supremacy clauses of the U.S. Constitution.

“The city’s minimum wage statute arbitrarily and illegally discriminates against franchisees and significantly increases their labor costs in ways that will harm their businesses, employees, consumers and Seattle’s economy,” IFA president Steve Caldeira said in a statement.

“We hope the court will block the ordinance to save jobs and prevent Seattle from unfairly singling out one type of business – a franchise – for punitive treatment,” Caldeira said.

The wage hike, unanimously approved by the Seattle city council on June 2, marked the first time a major U.S. city had committed to such a high base level of pay. It was championed by Mayor Ed Murray, who convened a committee of city, labor and business leaders to negotiate the package.

The measure would phase in the wage hike more quickly for larger employers. Businesses with fewer than 500 workers must raise wages to the $15 mark in seven years, larger businesses within three years, or four years if they provide healthcare insurance to workers.

“There is a problem in the franchise business model and I believe this is a discussion franchise owners should be having with their corporate parents,” Murray said in a response to the lawsuit posted on his blog.

“I don’t doubt at all that franchise workers are operating under tight conditions, but I think it’s a conversation to have with the people who have decided to spend oodles of money on lawyers to fight a higher minimum wage,” he said.

Seattle is among several cities leading the way in a nationwide push by Democrats to raise minimum wages. The Seattle suburb of SeaTac last year enacted a $15 minimum wage for many workers, although airport employees were later excluded.

President Barack Obama has pushed Congress to raise the federal minimum wage to $10.10 an hour from $7.25, but has failed to win backing in the Republican-controlled House of Representatives.

The lawsuit, which also claims that the minimum wage law violates the Washington state constitution, seeks a permanent injunction against the hike.